10-4c Hybrid Structure

hybrid structure

a combination of different organizational structures

Ian Dagnall/Alamy

A Hilton Hotel. The first hotel to bear the Hilton name was the Dallas Hilton, a high-rise that opened in Dallas, Texas in 1925.

Exhibit 10.9 illustrates a product structure for a global business with three geographical region-divisions.

Cementos Mexicanos S.A.B. de C.V. (CEMEX) is an example of a global business with a geographical region structure. Its three divisions include: 1) North America; 2) South America and the Caribbean; and 3) Europe, Asia, and the Middle East. Each regional manager supervises and is responsible for all the business activities undergoing in the countries comprising the region. These activities include production, distribution, marketing and sale of cement, ready-mix concrete, and aggregates. CEMEX’s corporate headquarters evaluates the results and performance of each geographical region, and allocates economic resources according to this data. CEMEX is the world’s largest building materials supplier and third largest cement producer. The company has a presence in more than 50 countries.

As global businesses grow in reach and depth, sometimes they adopt a combination of organizational structures that best fit their needs. This combination of organizational structures is called a hybrid structure. Global businesses with hybrid structures are said to be organized by more than one dimension at the top level. A global business with a hybrid structure is presented in Exhibit 10.10.

EXHIBIT 10.9 A GEOGRAPHICAL REGION STRUCTURE FOR A GLOBAL BUSINESS WITH THREE DIVISIONS

Chief Executive Officer

Corporate Headquarters

© Cengage Learning 2014

EXHIBIT 10.10 A GLOBAL BUSINESS WITH A HYBRID STRUCTURE

Chief Executive Officer

Product A Division

Corporate Headquarters

Product B Division Global R&D

Global Marketing

© Cengage Learning 2014

As the reader can see on Exhibit 10.10, this global business is using a mix of product structure (Product A and Product B Divisions) and functional structure (Global R&D and Global Marketing).

PepsiCo is an example of a company that uses a hybrid structure, which is organized into three business units:12

• PepsiCo Americas Foods, which includes Frito-Lay North America, Quaker Foods

North America, and all of its Latin American food and snack businesses such as Sabritas and Gamesa in Mexico; • PepsiCo Americas Beverages, which includes PepsiCo Beverages North America and all of its Latin American beverage businesses; • PepsiCo International, which includes all PepsiCo businesses in the United Kingdom,

Europe, Asia, Middle East, and Africa.

Hence Pepsi uses a combination of a product structure and a geographical region structure.

Another example of a global business with a hybrid structure is Procter & Gamble (P&G). This company is organized along the following divisions:13

• Beauty. P&G is a global market leader in beauty products, with retail sales estimated at $230 billion. In hair care, P&G has more than 20 percent of the global market share.

In skin care, the Olay brand is the top facial skin care retail brand in the world, and

P&G owns this brand. In prestige fragrances, P&G competes with the Gucci, Hugo

Boss, and Dolce & Gabbana brands. • Grooming. This division is comprised of blades and razors, face and shave preparation products (such as shaving cream), electric hair removal devices, and small household appliances. P&G is a global market share leader in the manual blades and razors market.

P&G is also a global market share leader in almost all of the world regions where P&G has a presence. P&G sells its electric hair removal devices and small house appliances under the Braun brand in several markets worldwide, where P&G faces competition from both global and regional companies. • Health Care. This segment consists of oral care, feminine care, pharmaceuticals, and personal health products. In oral care, P&G holds the second market share position at approximately 20 percent of the global market. In feminine care, P&G is the global market leader with about one-third of the global market share. In pharmaceuticals and personal health, P&G is the market leader in nonprescription heartburn medications and in respiratory treatments behind Prilosec OTC and Vicks, respectively.

At the same time, P&G holds approximately one-third of the global bisphosphonates market for the treatment of osteoporosis under the Actonel brand. • Snacks, Coffee, and Pet Care. In snacks, P&G competes worldwide against both international and local competitors, and has a global market share of approximately 10 percent in the potato chips market via the Pringles brand. In the coffee business, P&G mostly competes